Discovery Lapse Won’t End in Sanctions for Cisco

SAN JOSE, Calif. (CN) – Cisco Systems should not face sanctions after it failed to preserve the email archives of a minor player in a contract dispute, a federal judge ruled. U.S. District Judge Paul Grewal’s ruling joins the still-developing record of the duties that legal parties face with regard to the preservation of electronic evidence. It stems from a 2011 contract dispute between AMC Technology and Cisco Systems. The companies disagree as to whether AMC’s connector for the Unified Contact Center Express (UCCX) was deliverable under the parties’ licensing agreement. AMC says Cisco product manager Terry McKeon contributed to sales data and otherwise aided the person responsible for negotiating the agreement. McKeon, who retired four days before AMC filed its lawsuit, kept track of his work through spreadsheets on his computer and through company email. When AMC sought McKeon’s custodial data during discovery in 2012, however, Cisco could not comply because it had already reformatted the ex-manager’s laptop and deleted his emails 30 days after his departure, pursuant to company protocol. AMC said Cisco should have known to save all of McKeon’s electronic data and demanded adverse inference sanctions. Grewal concluded Monday, however, that Cisco had no way of knowing that it needed to save his documents since the former manager was not actually a key player in an agreement between the parties. “There is no question that after AMC specifically requested McKeon’s documents, Cisco had a duty to preserve them,” he wrote. “By that point, however, McKeon had already left Cisco for over a year and his information had long since been erased. The issue, then, is whether a duty to preserve arose on or before the day his documents had been wiped pursuant to routine company policy.” Though Cisco had a general duty to preserve evidence for AMC’s lawsuit, “the scope of this duty is not limitless,” Grewal wrote. “A litigant has an obligation to preserve only evidence ‘which it knows or reasonably should know is relevant to the action,'” he added. “This duty requires a party to ‘identify, locate, and maintain, information that is relevant to specific, predictable, and identifiable litigation,’ which includes identifying ‘key players’ who may have relevant information and taking steps to ensure that they preserve their relevant documents.” Requiring the parties to preserve all possible documents, whether relevant or not, would “cripple parties” who are often involved in legal disputes, the court found. In this case, McKeon was an “unlikely candidate to have documents relevant to the agreement because he did not engage in negotiations of the agreement in any way,” Grewal wrote. “Nor did he work on any internal committees deciding whether to commence the UCCX Connector project. He was merely the product manager for the underlying Cisco UCCX product.” Cisco, therefore, had no duty to preserve McKeon’s documents when it was informed of AMC’s complaint. The company followed company procedure by deleting McKeon’s documents 30 days after he retired, so there is no suggestion that Cisco acted with a “culpable state of mind,” as AMC suggested, according to the ruling. McKeon’s documents additionally would not likely have provided AMC with any relevant evidence for its case, the court found. Any possible financial documents that might have been relevant for the calculation of damages do not appear to be unique, especially given the fact that Cisco already gave AMC its internal financial spreadsheets of UCCX sales. “Even if the documents’ tangential relevance to damages warranted imposing some sanctions, which it does not, the adverse inferences sought by AMC establishing Cisco’s full liability for breach regarding the UCCS Connector are wholly inappropriate,” Grewal wrote. “Sanctions of the kind urged by AMC have similar effect to default judgment and should be awarded with ‘very great restraint.’ On the record presented, the requested sanctions would be disproportionate and unfair.”